Macroeconomics

Land records and titles in India

  • Blog Post Date20 November, 2017
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Prachee Mishra

PRS Legislative Research

prachee@prsindia.org

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Roopal Suhag

PRS Legislative Research

roopal@prsindia.org

Land ownership is broadly determined by access to a land title, which protects the rights of the title-holder, and impacts livelihoods, and industrial, economic, and social growth. However, land titles in India are unclear due to various reasons. In this article, Mishra and Suhag discuss those reasons, policies implemented to address poor land records, and challenges in moving towards a system of State-guaranteed titles.



Land is a unique asset because it is immovable; its value depends on its location; and with growing population its demand keeps increasing, while its supply is limited. Access to land (or land rights) has a wide-ranging impact on livelihoods, and industrial, economic, and social growth. People with land rights are found to be better off than the landless, due to better access to markets and other economic opportunities that come with such rights.

Land ownership is broadly determined by access to a land title, a document that states such ownership. Having a clear land title protects the rights of the title-holder against other claims made by anyone else to the property. In India, land ownership is determined through various records such as registered sale deeds, property tax documents, and government survey records.

Why do we need clear land titles?

Land titles in India are unclear due to various reasons such as legacy issues from the zamindari system1, gaps in the legal framework, and poor administration of land records. Such unclear land records have led to legal disputes related to land ownership, and affected the agriculture and real estate sectors.

Land is often used as collateral for obtaining loans by farmers. Disputed or unclear land titles inhibit supply of capital and credit for agriculture (Wadhwa 2002). Small and marginal farmers, who account for more than half of the total land holdings, and may not hold formal land titles, are unable to access institutionalised credit (Reserve Bank of India (RBI), 2015).

Disputed land titles lead to lack of transparency in real estate transactions making the real estate market inefficient (asymmetric information) (Ministry of Finance, 2012). Execution of new projects requires clarity on the ownership and value of land, both of which become difficult in the absence of clear land titles. Any infrastructure created on land that is not encumbrance-free can be potentially challenged in the future, making such investments risky.

With urbanisation, the housing requirement is growing in urban areas. In several cities, new housing projects are now being provided at the city boundaries. Unclear land titles mean several of these housing projects may get into land ownership disputes. Further, under new urban development schemes (like Smart Cities Mission and AMRUT (Atal Mission for Rejuvenation and Urban Transformation)), cities are trying to raise their own revenue through property taxes and land-based financing. This further necessitates the importance of providing a system of clear land titles in urban areas.

Why are land titles unclear?

Land ownership in India is presumptive: Currently, the Transfer of Property Act, 1882 provides that the right (or title) to an immovable property (or land) can be transferred or sold only by a registered document. Such documents are registered under the Registration Act, 1908. Therefore, in India, the registration of land or property refers to the registration of the transaction (or sale deed), and not the land title (Ministry of Rural Development, 2008). A registered sale deed is not a government guarantee of land ownership. This implies that even bonafide property transactions may not always guarantee ownership as an earlier transfer of the property could be challenged. During such transactions, the onus of checking past ownership records of a property is on the buyer, and not the registrar.

Further, since no one document guarantees ownership in India, land ownership is established through various documents. These include registered sale deeds, record of rights (document with details of the property), property tax receipts, and government survey documents. Therefore, land ownership in India, as determined by various documents, is presumptive in nature, and subject to challenge.

Cost of registering property is high; registration is not mandatory: While registering a property transaction, the buyer has to pay a registration fee along with stamp duty. Stamp duty rates across states vary between 4% and 10%. Note that stamp duties in other countries range between 1% and 4% (Planning Commission, 2009). In addition to stamp duty, registration fee is an additional 0.5% to 2%, on average. Since these rates are calculated on the cost of the property, in cases of high property values, it could end up being a fairly big amount. This raises the cost of property transactions, leading to people avoiding registering them.

Further, under the Registration Act, 1908, registration of property is not mandatory for all transactions. These include acquisition of land by the government, court orders, heirship partitions, and property leased for less than one year. Due to the high cost of registration, and registration not being mandatory, several property transfers do not get registered, and hence, records show outdated data.

Land records are poorly maintained and do not reflect the on-ground position: Land records consist of various types of information (such as property details, spatial details, past transactions, mortgage details) and are maintained across different departments at the district or village level. These departments work in silos, and the data across departments is not updated properly or in a timely manner (Ministry of Rural Development, 2008). Hence, discrepancies are often noted in land records. For example, a property transaction registered through a sale deed may not be simultaneously updated in the survey department that records spatial information (maps). In the past, surveys to update land records have not been undertaken or completed, and maps have not been used to establish actual property boundaries on the ground. Therefore, in several records, the property documents do not match the position on the ground.

Poor land records also affect future property transactions. It becomes difficult and cumbersome to access land records when data is spread across departments and has not been updated. One has to go back several years of documents, including manual records, to find any ownership claims on a piece of property. Such a process is inefficient and causes delays.

What policies have been implemented to address poor land records?

In order to improve the quality of land records, and make them more accessible, the central government implemented the National Land Records Modernization Programme (now Digital India Land Records Modernization Programme or DILRMP) in 2008. It seeks to achieve complete computerisation of the property registration process and digitisation of all land records.

However, the pace of modernisation of records and bringing them to an online platform has been slow. From 2008 till September 2017, 64% of the funds released under DILRMP have been utilised. Computerisation of land records has been completed in 86% of the villages; maps have been digitised in 46% of the villages; spatial data has been verified in 39% of the villages; and the survey/re-survey work has been completed in 9% of the villages. The slow progress could be attributed to the volume of records, most of which used to be stored manually.

Table 1. Status of completion of various components under the Digital India Land Records Modernization

Scheme component Status (% of villages)
Computerisation of land records 86
Mutation computerised 47
Issuance of digitally signed RoR 28
Cadastral maps digitised 46
Spatial data verified 39
Cadastral maps linked to RoR 26
Real time updating of RoR and maps 15
Number of villages where survey/re-survey work completed 9
Area surveyed 35
Notes: RoR is Record of Rights. Data are updated till September 2017.
Sources: Department of Land Resources, Ministry of Rural Development; PRS Legislative Research (PRS).

Besides, there is poor capacity at the district and local levels. The entire process of data collection and storage with regard to land records happens at the village, city, or block level. Various experts and committees have recommended the need to build capacity among officials at all levels to strengthen land management (Ministry of Rural Development, 2009a, Standing Committee on Rural Development, 2016). Estimates suggest that this training exercise has to be carried out for 100,000-200,000 patwaris2, over 50,000 survey staff, and in approximately 5,000 tehsils3, and 4,000 registration offices (Ministry of Rural Development, 2009b).

What are the challenges in moving towards a system of state-guaranteed titles?

To address issues with land records, a move towards conclusive titling has been proposed. In a conclusive titling system, the government provides guaranteed titles, and compensation in case of any ownership disputes. Achieving this will require shifting to a system of registered property titles (as opposed to sale deeds) as the primary evidence of ownership, and having clear and updated land records.

However, several measures would need to be undertaken to adopt a conclusive system of titling. Firstly, it would require ensuring that all existing land records are accurate and free of any encumbrances. Cross-checking all existing records against past transactions, and with the existing position on the ground will be a time-consuming and resource-intensive process.

Secondly, it would require that all information around land is available through a single window. This would require integrating land-related information across departments and updating these records (Second Administrative Reforms Commission, 2009). It would also require creating systems where any new information is recorded through a single window, and that gets reflected across all the departments.

Thirdly, with regard to the legal framework, land, registration of documents, and contracts are regulated across both the Centre and states. Moving to conclusive titling would require amending these central and state laws, and creating a unified legal framework that provides for government-guaranteed land ownership.

Notes:

  1. Prior to independence,land was mostly concentrated with zamindars, who had permanent property rights. They collected land rent from farmers in a given territory, and paid a fixed sum as land revenue to the government. This land revenue formed a key source of government income. However, the rent that was to be paid by the farmers was unregulated, and was subject to the discretion of the zamindars.
  2. Patwari is a government official at the village level who keeps records regarding the ownership of land.
  3. Tehsil is an administrative division of India denoting a sub-district.
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